The FCA Made a Cryptocurrency CFD risk warning.
With the surge of cryptocurrencies fame in the financial sector, a notice has been made to speculators. The FCA urged warning to traders by mentioning the potential issues of investment in cryptocurrency CFDs. .
Preceding this year, the British watchdog has warned traders about the risks related to ICO. Subsequent this warning, the UK regulator at the present issues a warning related to cryptocurrency contracts for differences (CFDs), urging investors to take caution as such products are extremely risky.
The UK Financial Conduct Authority (FCA) warned traders stating that CFDs with cryptocurrencies as the underlying investment are risky assets.
The warning makes known:
“Contracts for differences (CFDs), including financial spread bets, with cryptocurrencies as the underlying investment, are increasingly being marketed to consumers. These products are extremely high-risk, speculative products. This warning is to inform consumers about the risks of buying them.”
The FCA has in addition , warned investors last month regarding cryptocurrency CFDs as a great many online derivative companies in UK are now providing Bitcoin and Ethereum trading on their platforms.
The FCA regulates The UK's Financial markets, including cryptocurrency CFDs and offers all kind of insurance to the investors. CFDs allow traders to speculate on the changing price of an asset. Traders often enjoy leverage during the investment in the CFDs. However ,, the FCA reiterates that trading cryptocurrency CFDs are speculative and extremely high-risk investments because of their volatile nature.
In a good number of situations, crypto tokens have displayed corrections of more than 30 percent and in some cases even 50 percent of their prices. :
“We are concerned about the growth in retail clients trading in CFDs, particularly those offered with a cryptocurrency as the underlying asset… The price volatility of the asset comes with significant risks to retail investors.”
Bitcoin rates have been extremely volatile in the latest months striking highs of almost $19,000 before slipping to 7500 in a short time.
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